The average cost is based on the Item Size and the Cost from the 1st, 2nd, and 3rd suppliers in the part record.
When you first enter the part, the average cost is the cost from the 1st supplier. Over time, the average cost is updated as the part is used and ordered from the 2nd and 3rd suppliers.
If the cost from the supplier is different when the part is received, the average cost is updated automatically.
The average cost is applied when the part is added to tickets.